Brazilian pharmaceutical companies command 67% of sales

Valor International

Brazilian pharmaceutical companies have been grabbing a growing share of retail medical products’ sales and already supply more than two-thirds of the volume sold in the country. In revenue, their share is also larger than that of multinationals, but smaller than the presence in unit terms: 58%, compared with 67%.

That is what an extensive analysis produced by the Association of National Pharmaceutical Companies (Alanac), based on data of consultancy IMS Health for pharmaceutical retail in the January-September period, shows. In those months, drug sales at Brazilian pharmacies grew 12.4%, to R$37 billion. In number of doses, the increase was 4.9%, to 109 billion.

Henrique Tada, Alanac’s executive president, says such performance demonstrates that drugs made by Brazilian companies do get to consumers at a lower prices, either in competitive markets, like generics, or in categories of higher value added. “There are a few products that are still produced in the country and which have a higher price, without the local competition. But in most segments Brazilian industry is already present,” he says.

Moreover, the industry has been watching the closure of factories and reduction of production in the country by multinationals, while Brazilian brands invest in capacity and get into niches considered extremely sophisticated, like those of biologic and biosimilar drugs. “The latest events of openings were of domestic companies and, in addition to demonstrating the technology achieved, there is cost reduction,” Mr. Tada says.

On the 25th, for example, Libbs opens Biotec in Embu das Artes, São Paulo, a plant dedicated to the development of monoclonal antibodies, considered a new frontier for the global industry. Large companies of Brazilian capital, such as EMS, Hypermarcas, Eurofarma and Aché, have replaced the Big Pharma and appear among the top six of the local ranking in terms of sales (considering discounts granted in the chain).

According to Alanac’s study, in the first nine months of 2012 the Brazilian companies accounted for 58% of drug sales in unit terms at drugstores. In 2014, their share reached 63%. This year, 67%. The figures show that, in this period, the average annual sales growth of Brazilian pharmaceutical companies was 3.7%, while multinationals had a negative performance.

In revenue, the Brazilian companies’ average annual growth from 2012 to 2016 was 3.8%, while foreign competitors had negative rates. “The pace is still one of growth, but the trend is toward deceleration this year and next year, because the [comparison] basis has become bigger and the crisis has been affecting mainly the companies that have sales to the public sector, which directly impacts the industry’s performance,” Mr. Tada says.

In Farmácia Popular, a federal government program that broadens access to treatment of the most common diseases in the country, domestic pharmaceuticals also are dominant, with 67% in units and 61% in value, against 25% and 34%, respectively, for multinationals.

The higher average price charged by foreign companies explains the smaller difference in revenue shares. “The share of local companies is also bigger because of their capacity of fast response,” Mr. Tada says. According to the study, in general the average price of the unit sold by Brazilian pharmaceutical companies has been R$20.76 this year, compared with R$30.37 of multinationals.

In the late 1990s, Mr. Tada recalls, when the proposal of generics in the country was launched, Brazilian companies adopted the idea and became big suppliers. “The industry is agile and manages to respond rapidly to the government. Also in PDPs [Partnerships for Productive Development] the national companies have greater share,” he adds. In the breakdown by type, Brazilian companies account for 62% of the sales of non-prescription drugs and 69% of prescription drugs.